We've got an interesting discussion going about this restriction.

From my view, "vmc" references line of sight to the runway during a circle and I wouldn't think cloud clearances apply as you are still on an instrument procedure however my buddy pointed to the definition of VMC.

Visual meteorological conditions (VMC) means meteorological conditions expressed in terms of visibility, distance from clouds, and ceiling equal to or better than specified minima.

His argument is that we need to adhere to the cloud clearances while circling.

Does anyone have a reference that states that distance from clouds does not matter while circling?